FAMILY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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MRS D |
Applicant |
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MR D |
Respondent |
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Robert Peel QC (instructed by Radcliffes Le Brasseur) for the Respondent Husband
Hearing dates: 2-3-15 to 6-3-15
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Crown Copyright ©
Mrs Justice Roberts :
A. Introduction
B. Background
The genesis of the current business structure
Maple Technology Limited
The business structure
(i) Rooyen Limited, incorporated in the British Virgin Islands, was set up as the legal owner of an aircraft which was taken by the company as part of a debt collection recovery. Its parts have since been sold on and there is little, if any, residual value in the company.
(ii) Ada Limited is another BVI company which was taken over as part of a debt recovery in Country A. It does not trade and its only asset is a loan which was provided to the parties to enable them to purchase the French property which they acquired in August 2011 (about which I shall say more at a later stage of this judgment).
The Regency Partnership
The Manor Trust
(i) Regency Associates Group Limited, incorporated in the BVIs to service debt recovery contracts in the Country T. It operates various association agreements with MVP, a company through which Peter Tanfield provides his own consultancy services;
(ii) Continental Assets & Development Limited through which was routed the loan advanced by Ada Limited in connection with the acquisition of the French property;
(iii) Surrey Property Company Limited, incorporated in the BVIs, is now in dissolution. It was the owner of a small property portfolio which consisted of three residential properties in Surrey. These properties have been sold during the currency of these proceedings and the cash generated paid to the Trust to repay a loan from Maple.
C. Other issues arising in respect of computation
Other assets
D. W's case in relation to non-disclosure
The Law
'There must surely be a sound evidential basis for reaching a conclusion as to the scale of undisclosed assets. The court should not be led into a knee-jerk reaction that says simply because of evasiveness and opacity is demonstrated there is some vast sum salted away. This is not to say that the court has to put a precise figure on the scale of the hidden assets, let alone to identify by reference to evidence where they are or what they comprise : see Al-Khatib v Masry at para [89] and Ben Hashem v Al Shayif at para [70][1].'
'[16] Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then :
(i) The court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.
(ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the court is satisfied he has not got.
(iii) If the court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.
(iv) In making its judgment as to quantification the court will first look to direct evidence such as documentation and observations made by the other party.
(v) The court will then look to the scale of the business activities and lifestyle.
(vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.
(vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the claimant is seeking should not be used as the sole metric of quantification.
(viii) The court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order which is unfair to the non-discloser, it is better that a court should be drawn into making an order that is unfair to the claimant.'
i. direct evidence of an asset which the alleged non-discloser has not revealed (the classic example of the revelation of the existence of a bank account or accounts which feature nowhere in his financial presentation to date);
ii. failure to comply with court orders and/or provide adequate or complete responses to questions asked from which failure the court feels able to draw inferences adverse to the alleged non-discloser;
iii. evidence of a lifestyle which is wholly inconsistent with disclosed financial resources.
E. The specific allegations of non-disclosure
(i) The first school fees payment : In 2010, a sum of money (£55,204) owed by a company called MVP to the Regency Partnership was used to discharge school fees for one of H's granddaughters (Emma). The sum in question was paid directly to the school, thereby 'bypassing' Regency/Maple. The sum in question was an additional payment over and above the contractual mandate and was paid by MVP at H's direction as a result of a further negotiation which followed the recovery by MVP of more than had been anticipated in the original contract.
(ii) W asserts that, pursuant to one mandate potentially worth US$50 million, MVP received a sum of US$29 million, a figure way in excess of the sum paid to Regency (US$4 million). This much is clear from contemporaneous documents which have been produced. On this basis, she asserts that Regency should have / would have received (pursuant to a side agreement) a much larger payment than that reflected in the accounts. W accepts that she has no direct evidence that H and Francois Bernard renegotiated their own Services Agreement or entered into an oral agreement which is not reflected in the paperwork.
(iii) W asserts that Regency/Maple should have received some financial benefit from an agreement in respect of a substantial debt owed by a Nigerian mining company (Natal Mines) to X LTD. She has produced a single email from 2009. H denies that there ever was a formal mandate in respect of this debt and/or that he reached some sort of off balance sheet arrangement with Mr Bernard in respect of it.
''He threatened that I would not live to see the end of this divorce if I continued to pursue this. He reminded me that Francois' company, MVP, provided security and protection services to the President of the Country T, his Senior Staff and the Natal Mines gold mines and that if I continued to ask questions about this project he would ensure that I was 'dealt with'.' [1/C:205]
'There is no X LTD Natal Mines mandate. The Applicant has found and misinterpreted one email from the Regency server. The position is not as stated in the narrative at question 7 which is incorrect. The Respondent has in the past recovered debts from Natal Mines,. This was about 7 years ago. The Applicant has taken a document which contain [sic] a list of promissory notes sent to the Respondent by PRL[5] with a request that he consider finding a bank that would purchase at a discount the promissory notes listed by the Bank J. This was a difficult task and after making some enquiries notably with Bank P it was agreed not to do anything further.' [1/C:120]
(iv) The second school fees payment : a further sum of £55,607 was paid by Regency in June 2011 to one of H's business associates, Peter Tanfield who then used the funds at H's request to pay Rachel's school fees which were paid directly to the school. In this context W points to significant sums of money which were paid by the Partnership to Mr Tanfield. H accepts that regular payments made in this way (including cash payments) were a normal part of his business relationship with Mr Tanfield and undertaken as part and parcel of his work for Mullerat.
'To our help and assistance in arranging to end contract with K Henry and open contract with K Henry in connection with Garrick France Contract with Ivory Coast. Associated liaison work in Ivory Coast during period 2008 to 2010.
We will give continuing help and support with all new contracts in Ivory Coast as necessary.
Our fee
(Fifty six thousand pounds) £56,000'.
Dealings with Mullerat / Peter Tanfield
(v) In 2011 the Partnership received €60,000 in respect of an agreement with Mrs Jacques. It is W's case that the Partnership should have recovered significantly more from funds which were subsequently received by Mrs Jacques and paid locally in Country A.
'This was an extremely difficult debt collection that I had been working on for 5 years. I was paying the lawyers myself on an ongoing basis. It was extremely expensive and difficult to fund. I even had to borrow from my husband. Although part of the idea at the time of the agreement was for H to work on this, there was arbitration in relation to the debt in France and Switzerland and there were court proceedings in France and England. All of that was dealt with by me and H had nothing to do with it. A lot of the work was purely legal work.'
'The fee for this recovery has now been agreed at €60,000. It will be reviewed when further funds will come.' [1/C349]
'I have told them that the amount [i.e. the balance of the litigation settlement proceeds paid by the Country A government] had to be paid locally but I guess they wish to have a further explanation. Would you be kind enough to send me something to enable me to send it on ?'
'I flew to Perth on 9 December 2011 with the girls. Rupert broke up from school later and he flew out with H. In the intervening period while I was in Australia and H was in the UK we spoke on the telephone and H mentioned to me that Diane was in the UK visiting her mother in Southampton who was in hospital. He told me that he had met with her and just learned that the recovery he was expecting from the work he had done for her would not be as much as he had expected it to be. I believe that since H and I had had a huge row and he had become aware that I knew he was having an affair, he renegotiated the terms of his success fee with Diane given that by his own admission, the arrangements were 'informal'. As far as I am aware, H continued this relationship for many months.' [1/C208-209]
The parties as witnesses
'I have my concerns about whether he has disclosed all his assets. It is extremely hard for me to quantify but, knowing the arrangements he has entered into with something as simple as his grandchildren's school fees, it leads me to the conclusion that it would be very easy in the business in which he is currently working [to conceal assets]. He opens and closes bank accounts around the world with the Summit trustees who are not always aware of what is happening.'
F. The mandate run-off
G. Points of Agreement and remaining points on computation
Adjustment of the Partnership accounts
Notional adjustment for disparity in respect of legal costs
The Education Fund
General maintenance for the children
Chattels
H. Overall assessment and needs
Note 1 [2001] EWHC 108 (Fam), [2002] 1 FLR 1053; [2008] EWHC 2380 (Fam), [2009] 1 FLR 115 [Back] Note 2 Although I heard some evidence from W that she suspected he might have been planning to seek advice in relation to divorce, this was based on no more than the fact that she could not find their marriage certificate when she commenced instructing her own divorce lawyers. When the staff in the office told W where she should look (the top drawer of H’s desk), she located the document with two current bank statements. From this, she made the deduction in her own mind that he might have been planning a pre-emptive strike. [Back] Note 3 This company has nothing to do with the Regency Associates Partnership, although it is part of a parallel business structure involving Maple and the Partnership. [Back] Note 4 An email at [1/C242] from H to Lisa Brockley at Summit dated 11 May 2008 appears to confirm that this was indeed the agreement reached with HSBC at the time. [Back] Note 5 PRL is another corporate entity controlled by Mr Bernard through which he sells electrical equipment in Africa and DRC in particular. [Back] Note 6 Although the text of H’s Reply at [1/C120] reverses references to ‘the Applicant’ and ‘the Respondent’ in relation to this conversation, the sense is clear and was confirmed during the course of H’s oral evidence. [Back] Note 7 H told me that, as a personal favour, he had agreed to submit invoices through Regency Limited having endorsed Jacques’s approach that an ‘international’ recovery exercise was likely to put the government under greater pressure than a domestic request from a Country based lawyer or debt recovery agent. [Back] Note 8 This is confirmed by an email he sent to Mrs Jacques on 25 June 2012 at [1/C363]. [Back]